Reference: 09-13 Brown Company Makes Four Products in a Single$\text { Additional data concerning these products are listed below. }$

The Answer of Reference: 09-13 Brown Company Makes Four Products in a Single$\text { Additional data concerning these products are listed below. }$

Reference: 09-13 Brown Company Makes Four Products in a Single$\text { Additional data concerning these products are listed below. }$

The Answer of Reference: 09-13 Brown Company Makes Four Products in a Single$\text { Additional data concerning these products are listed below. }$

Solved

Reference: 09-13
Brown Company Makes Four Products in a Single

question 65

Multiple Choice

Reference: 09-13
Brown Company makes four products in a single facility. These products have the following unit product costs: $\begin{array}{|l|c|c|c|c|}\hline&\text { Product }\\\hline &A&B&C&D\\\hline \text { Direct materials } & \$ 15.60 & \$ 19.50 & \$ 12.50 & \$ 15.20 \\\hline \text { Direct labour } & 17.60 & 21.00 & 15.40 & 9.40 \\\hline \begin{array}{l}\text { Variable manufacturing } \\\text { overhead }\end{array} & 4.40 & 5.60 & 8.10 & 5.10 \\\hline \begin{array}{l}\text { Fixed manufacturing } \\\text { overhead }\end{array} & 27.50 & 14.40 & 14.50 & 16.50 \\\hline \text { Unit product cost } & \underline{\underline{\$ 65.10}} & \$ 60.50 & \$ 50.50 & \$ 46.20 \\\hline\end{array}$
$\text { Additional data concerning these products are listed below. }$
$\begin{array}{|l|l|l|l|l|}\hline&\text { Product }\\\hline &A&B&C&D\\\hline \text { Grinding minutes per unit } & 2.00 & 1.10 & 0.70 & 0.30 \\\hline \text { Selling price per unit } & \$ 78.70 & \$ 71.10 & \$ 67.90 & \$ 62.60 \\\hline \begin{array}{l}\text { Variable selling cost per } \\\text { unit }\end{array} & \$ 2.60 & \$ 3.10 & \$ 2.80 & \$ 3.50 \\\hline \text { Monthly demand in units } & 3,000 & 2,000 & 2,000 & 4,000 \\\hline\end{array}$ The grinding machines are potentially the constraint in the production facility. A total of 10,500 minutes are available per month on these machines. Direct labour is a variable cost in this company.
-Which product makes the LEAST profitable use of the grinding machines

Definitions:

Rights Vested

Refers to rights that are securely granted to an individual or entity, and cannot be revoked or amended without consent.

Modify or Rescind

To change, alter, or revoke an agreement or contract either partially or completely.

Incidental Beneficiary

A third party who unintentionally benefits from a contract but has no legal right to enforce the contract terms.

Intended Beneficiary

A person for whom a contract is specifically made, who has the right to enforce the terms of the contract, even though they are not a party to it.